Starbucks pressured into paying HMRC £5m despite no UK profit

STARBUCKS has bowed to political pressure, making its first corporation tax payment to the Treasury since 2008 even though it still doesn’t make any profits.

The coffee chain said yesterday it had voluntarily paid £5m to the Exchequer, the first tranche of £20m in contributions over the next two years. Starbucks’ UK subsidiary has not posted a profit for five years, meaning it is not liable to pay corporation tax, but the company has been singled out for its accounting practices, even though they are little different to those of many other multinationals.

Starbucks’ finance chief Troy Alstead, along with representatives from Google and Amazon, was hauled in front of Labour MP Margaret Hodge’s Public Accounts Committee in December to face questions over tax contributions.

Starbucks is the only one of the three to have responded by saying it will pay more. Mark Littlewood of the Institute of Economic Affairs yesterday criticised the outcome of the Starbucks case and told City A.M. there was a danger of the UK “moving towards an arbitrary tax system based on a company’s public relations” rather than being based around “a cool-headed and objective assessment” of its accounts.